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Softbank sells Yahoo! shares

Softbank is still the biggest shareholder in Yahoo!
Written by ZDNet UK, Contributor

Softbank said on Thursday its US unit had completed the sale of 3.16m shares in Internet portal Yahoo, generating a $336m (£224m) profit for the Japanese Internet investor.

The sale reduces Softbank's stake in Yahoo to 22.58 percent from the previous 23.18 percent, but it is still the biggest shareholder in the US company.

It is the latest in a series of sales by Softbank, which owns a stake in ZDNet. The company has been selling stakes in Internet affiliates that have convinced investors the company has limited options to generate cash beyond such share sales.

But its stake in Yahoo, a crown jewel in Softbank's portfolio, had been thought to be too valuable for the Internet investor to reduce it just to gain a quick profit.

Prior to the news, Softbank ended up 4.24 percent at 17,200. Yahoo shares closed at 113 1/16 Wednesday.

Analysts said the move may help finance its planned purchase of a failed bank, a move most considered controversial.

"It means they finally have the cash for NCB (Nippon Credit Bank) they didn't have the first time," said Thomas Rodes, analyst at Nikko Salomon Smith Barney.

Softbank America sold 3.16m shares in Yahoo to bank a $336m profit, reducing its stake to 22.58 percent from 23.18 percent, Softbank said.

Yet the sale underscored the view that Softbank has limited options if it needs to generate cash and some analysts suggested it should abandon its move for NCB as the purchase would push it too far from its core business.

"(Buying) NCB is a mistake," Rodes added. Softbank and its consortium partners failed to agree terms for NCB with the government by Wednesday's deadline, but not everyone saw that as a bad thing.

"It was positive news. I have been skeptical about Softbank's plan to buy NCB as it would not fit well into its Internet-based business strategy," said Kota Nakako, an analyst at UBS Warburg.

NCB, which collapsed under the weight of bad loans made in an asset-price bubble a decade ago, is a conventional "old Japan" bank that specializes in real estate-related lending. It was placed under state control in December 1998.

"Softbank hasn't shown any clear-cut plan on how to make use of NCB. From the viewpoint of its cash position it might be better for Softbank to abandon the purchase," said Soichiro Fukuda, analyst at IBJ Securities.

Its shares tumbled 8.44 percent on Wednesday after news that it had failed to agree terms for NCB but rebounded 4.24 percent on Thursday as the market decided that was good news.

"Softbank shares were apparently oversold yesterday... the NCB 'setback' is positive," Nakako said.

On Thursday, Softbank shares ended at 17,200 yen, more than 70 percent below their peak in February due to doubts about high-tech valuations and volatility in US markets.

Softbank has said it would use NCB as a lender to start-up ventures. But the main financing vehicle for start-ups should be equity investment because young firms usually have insufficient collateral to risk against loans, analysts said.

"Dealing with various problems at NCB requires lots of energy on the part of management. I don't know why Softbank wants to buy such a troubled bank,"" said Nakako of UBS Warburg.

Softbank is a majority shareholder of ZDNet

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